“It’s entirely possible that the transaction costs of reporting royalties in revenue share deals (including productivity loss and the cost of servicing songwriters and artists) likely exceeds the royalties paid. My bet is that the costs vastly exceed the benefits.”

Robert Levine’s post about Apple’s new proposal for a simplified mechanical royalty rate for streaming services:

This afternoon, Apple submitted a preliminary proposal to the U.S. Copyright Royalty Board to simplify the way music-streaming companies pay songwriters and publishers — in a way that could make it more expensive for rivals like Spotify and YouTube to keep offering free streaming.

Right now, streaming companies pay songwriters and publishers between 10.5 percent and 12 percent of their overall revenue, according to a complicated formula. (Labels and other owners of recording copyrights negotiate their own terms.) The money is divided into public performance and mechanical royalties, then paid to collecting societies and publishers.

Apple, which has always had a gift for creative simplicity, wants to make this process easier and more transparent, according to a copy of the filing obtained by Billboard. The company’s proposal to the Copyright Royalty Board suggests a simple, “all-in” statutory rate that would be “fair, simple and transparent, unlike the incredibly complicated structure that currently exists.” It suggests a rate of $0.00091 per interactive stream, or 9.1 cents per hundred plays. The songwriting royalties for 100 streams would equal those for one download, which has an appealing simplicity.

Apple’s suggested royalty structure would make accounting simpler and more transparent, but it would also make it more costly to run a free service, since streaming companies would have to pay a minimum rate, rather than a percentage of revenue.